Gender Differences in Wage Negotiations: An Ultimatum Game Experiment

Abstract

The gender gap in wages that is accepted as a major economic and social issue, can arise from the behaviours of individuals. The fact that the labor force participation rate of women in Turkey is quite low compared to other OECD countries is also an important problem. Women really may accept lower wages in negotiations. However, perceptions that women may accept lower offers may affect offers made by employers. This attitude of employers may cause a gender gap in wages and a low female labor force participation rate. We explore the behavioural gender differences during bargaining by using the ultimatum game. Altruism, risk aversion, generosity, and self-confidence have a significant impact on preferences and so the results of wage bargaining. The ultimatum game is an effective tool for understanding altruism, risk aversion, and generosity. We found two important results in this study. First; when the proposer knows the gender of the other party, his/her offers to women are lower than those to men. Latter; When the gender of the other party is known, female proposers bid higher than men. These results provide evidence that gender income inequality in the labor market may be due to the attitudes of employers (especially men employers). These results can actually explain why the female labor force participation rate is low in Turkey, but more detailed studies are needed on this subject. This study contributes to the literature as one of the few studies examining the wage bargaining of employers with male and female workers in Turkey.